Stimulus still the name of the game


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Sept 7 – A look at the day ahead from Danilo Masoni.

Strong trade data from China, speculation the Fed might push back tapering its bond purchases after last month’s lackluster job creation and the prospect of more stimulus in Japan are making for another risk-on session.

World stocks have notched their eighth consecutive day of gains to lifetime peaks in Asian hours, while Wall Street futures point to near record openings after the long Labor Day weekend.

Japan’s Topix index, having powered to 31-year highs after Prime Minister Suga’s abrupt departure, got an extra fillip as Fumio Kishida, a contender to succeed Suga, called for a 30 trillion-yen stimulus package ($273 billion)

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Australia’s central bank, meanwhile, stuck with plans to trim its bond buying program but in a dovish concession it extended the program to at least mid-February. Next up on the central banking front is Thursday’s ECB meeting, where a possible decision to slow bond purchases have lifted bond yields to around seven-week highs.

On currency markets, the Australian dollar slipped 0.3% after the RBA’s decisiion to extend its stimulus program, while the yuan firmed modestly after data showing an unexpected 25.6% pick-up in Chinese exports last month.

And on the corporate news front, eyes on Allianz after regulators reportedly launched an investigation into Germany’s No.1 financial company following the demise of some of its U.S. investment funds. Deutsche Telekom shares rose 2% premarket after the sale of its Dutch unit while it also struck a share-swap deal with Softbank to up its stake in U.S. unit T-Mobile.

Key developments that should provide more direction to markets on Tuesday:

-China’s Aug exports growth unexpectedly picks up speed in boost to economy -Australia’s central bank sticks to tapering, but extends timeline – Aluminium prices stay near 10-year peaks after Guinea coup. -Emerging markets: Argentina central bank – UK consumer spending rose by 15.4% last month compared with August 2019 -German industrial output/ZEW sentiment -Auctions: US Treasury 3-year notes; T-bills, 12-month, 6-month, 3-month

(Reporting by Danilo Masoni; editing by Sujata Rao)